Loan refinancing activity and robust high-yield bond issuance extended or diminished $370 billion of loans within the refinancing cliff timeframe during the first three quarters of 2012. Despite the significant process made in 2012, the market still needs to refinance or extend approximately $632 billion of loans expected to mature between 2013 and 2014, according to the new report 'Bridging the Refinancing Cliff, Volume VI,' published by Fitch Ratings.

Of the $357 billion of loan issuance through the first three quarters of 2012, approximately 57% of issuance has been directed towards refinancing. The U.S. high-yield bond market has also contributed greatly in redistributing loans as bond-for-loan takeout volume totaled $68 billion through the first three quarters of 2012.

Issuers have been intensely focused on extending the peak years of the refinancing cliff. Since the beginning of 2011, approximately $120 billion of loans coming due in 2013 and 2014 have been extended beyond 2015. Based on the current level of market activity, Fitch estimates the debt capital markets will be able to refinance or extend these maturities to more normalized levels in the next six to nine months.

Despite this intense focus on the 2013 to 2014 portion of the refinancing cliff, the market will soon begin focusing on a second peak that has started to form. Approximately $655 billion of loan maturities are expected to come due between 2016 and 2017. However, based upon the market's ability to smooth the 2013 and 2014 peak, the current pace of activity, and capacity in the loan and high-yield bond markets, Fitch believes that the market will successfully reduce these maturities to more normalized levels over the next 18 to 24 months.

This installment of the series also provides a breakdown and analysis of the European refinancing cliff and what factors will likely affect its success in refinancing its maturities in the coming years. Higher intra-bank funding costs and regulatory capital charges have forced many European lenders to tighten credit standards, creating long-term deleveraging pressure for many speculative-grade issuers. Since fourth-quarter 2010, about 45% of Fitch-rated debt maturing during 2013-2015 has been pushed-out, corresponding to around EUR70 billion. Despite these efforts, the total debt falling due in the period 2013-2015 remains high relative to the amount of new finance recently provided by the primary markets.